Ethereum has been consolidating in a narrow price range for several months, trading between $3,200 and $3,500. Despite the recent rally in the broader market, ETH is still struggling to break out of this range.
This downturn comes after a prolonged decline from the all-time high of $4,800 recorded in late 2021. The cryptocurrency is currently down about 32% from this peak.
Notably, even the appointment of a new cryptocurrency-friendly administration and new regulatory clarity have done little to push Ethereum beyond its current level of resistance.
Amid these market conditions, ShayanBTC, a contributor to CryptoQuant’s QuickTake platform, highlighted important indicators that could signal an imminent price move for ETH.
Ethereum’s high leverage ratio and what it means
Ethereum’s expected leverage ratio, which measures the average leverage used by futures market participants, has been steadily rising so far, according to Shayan in a recent analysis uploaded to the CryptoQuant QuickTake platform.
This rise, reported by Shayan, reflects an increased willingness to take risk among traders, even though Ethereum’s price is still in a state of consolidation. Using high levels of leverage can set the stage for significant price movements, even if the direction remains uncertain. Shayan commented:
Due to the highly leveraged environment, imminent price movements outside this range are expected to trigger significant and impulsive price movements.
Shayan explained that as more traders use higher leverage, the market becomes more vulnerable to sudden price movements. This is because these leveraged positions can trigger sudden and significant price corrections if liquidated through a short or long squeeze.
Continued consolidation around $3,200-$3,500 has heightened interest in the future of Ethereum. CryptoQuant analysts wrote:
Given the prevailing market sentiment, a bullish breakout seems more likely. However, traders should closely monitor leverage ratios as sudden changes can lead to unexpected volatility and liquidations.
ETH market performance
As of this writing, ETH is trading at $3,282, down 0.1% in the last 24 hours. Interestingly, despite ETH’s poor performance, the asset’s daily trading volume was quite positive last week.
Last Wednesday, ETH’s trading volume was less than $20 billion, but as of today, Ethereum’s daily trading volume has exceeded $24 billion. This is quite the opposite trend, especially when compared to ETH’s market performance over the same period.
According to Javon Marks, a prominent cryptocurrency analyst at
Ethereum (ETH), which performs similarly to the 1.618 Fib level as it did last bull cycle, could increase almost +240% from here to the $11,865.6 level!
A 5-digit ETH may be on the way and in development, which could help many altcoins make major runs.
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— JAVON
Marks (@JavonTM1) December 29, 2024
Featured image created with DALL-E, chart from TradingView